How the UK Became a Global Leader in Carbon Reduction

The UK has decarbonised faster than any other developed country since 1990. Its greenhouse gas emissions fell by 5.7% in 2023 to their lowest level since 1879. Based on government energy data, emissions fell to 383 m tonnes of carbon dioxide equivalent (MtCO2e) in 2023.

The UK’s emissions are now 53% below 1990 levels, while GDP has grown by 82%.

The drop in emissions in 2023 was largely due to an 11% fall in gas demand. Also, coal use fell by 23% in 2023 to its lowest level since the 1730s, as all but one of the UK’s remaining coal-fired power stations closed down. This was because the UK government introduced a power sector tax (CPS) which hit coal twice as hard as gas, making it uncompetitive. In 2015, coal produced a quarter of UK’s electricity. Now it accounts for less than 2%.

At the same time, the UK’s Renewable Obligation (RO) and Contracts for Difference (CfD) schemes have helped in driving down the costs of renewable energy. Introduced in 2002, the RO required UK electricity suppliers to purchase an increasing share of their electricity from renewable sources. Energy producers were issued Renewable Obligation Certificates (ROCs) for each megawatt-hour of eligible renewable electricity generated. Suppliers had to prove their compliance with the obligation, or pay a penalty. This approach encouraged the rapid adoption of mature technologies such as wind and biomass.

Under the CfD scheme, introduced in 2013, renewable energy generators are paid a fixed price (the "strike price") for the electricity they produce, regardless of the fluctuating wholesale market price. If the market price falls below the strike price, the generator receives a top-up payment to make up the difference.

By providing long-term price stability, these schemes have enabled renewable energy developers to secure financing and invest in large-scale projects.

This has led to a rapid expansion of renewable capacity, particularly in offshore wind. As of 2023, the UK had over 11,000 wind turbines with a total installed capacity of 30 gigawatts (GW). This makes the UK the sixth-largest wind power capacity globally. In the first quarter of 2023, wind power contributed to a third of the country’s electricity.

The installation of solar panels and heat pumps in the UK homes soared in 2023, driving the country to its highest-ever level of domestic low-carbon technology upgrades. Registered solar photovoltaic (PV) installations rose nearly 30% to a record of 189,826 in 2023, according to the Microgeneration Certification Scheme (MCS). The total MCS-certified installations of solar PV overall increased to 1,441,753 since 2009, equivalent to more than 5% of all UK households.

The seeds of this near-record figure for home solar were sown in prior years driven by deadlines under the Feed-in-Tariff (FiT) subsidy scheme.         

Similarly, the number of MCS-registered air-source heat pump (ASHP) installations grew to a record 36,799 in 2023 from 29,490 a year earlier. The growth in demand for ASHPs was being driven by the Boiler Upgrade Scheme (BUS) subsidy, which was introduced in 2022 and increased in 2023. The BUS initially offered a £5,000 grant for those installing an ASHP or biomass boiler and £6,000 for a ground-source heat pump (GSHP). This was raised to £7,500 for both ASHPs and GSHPs in October 2023.

The switch to electric cars continues. The UK government is sticking to its promise of ending the sale of new petrol and diesel cars by 2030 and has introduced a goal for car manufacturers to make more vehicles electric.

In August 2023, one-fifth of the cars bought were electric.

The Carbon Price Support (CPS) mechanism has been effective in holding fossil fuel companies accountable as it directly targets the carbon content of the fuels they produce.  However, the CPS  only taxes the power sector. We need to address emissions from buildings, transport, industry and agriculture. Expanding the CPS or a similar carbon pricing mechanism to other industries will hold a wider range of companies accountable for their emissions.

Challenges and Opportunities for Sustainable Development in Asia

In 2023, natural catastrophes caused $50 billion of damage in Asia. More than 200,000 homes were destroyed in China’s Gansu Province in December. Rainfall-induced flash flooding in Hong Kong was beyond average levels.

Asia must decarbonise quickly to mitigate risks related to both natural disasters and geopolitics--the EU’s 2024 anti-deforestation legislation forbids the import of Indonesian palm oil. It can learn a lot from the UK about deliberate climate action by studying the above initiatives. UK’s 23 MtCO2e reduction in 2023 was faster than the 14 MtCO2e per year average needed to reach net-zero by 2050.

Asian companies must continue to invest in reducing carbon emissions instead of just buying cheap carbon credits.

They should look at electrifying their operations, and transitioning to renewable energy urgently.  Reducing packaging, improving recycling, and ensuring responsible disposal must be taken seriously.

The credibility and quality of carbon credits must also be increased. Many companies have used carbon credits for their sustainability efforts from the unregulated voluntary market, which grew to $2bn in 2021. The credits are generated on the basis they are stopping deforestation, promoting tree planting and creating renewable energy projects in developing countries. 

However, the Paris agreement must define Paris-compliant carbon credits so that buyers continue to have the confidence to buy them.        

Potential for carbon leakage must be curbed. Emissions-intensive industries should not be allowed to relocate to jurisdictions with less stringent regulations.

Green bonds have been used in countries such as Singapore, Malaysia and the Philippines. They should continue to be leveraged more extensively to raise capital for clean energy projects.

We should also explore ways to better integrate distributed, community-owned renewable energy into our market mechanisms to drive more inclusive and equitable clean energy transition, in contrast to more centralised utility-scale approach. Examples include solar home systems and mini-grids in rural areas of countries such as Bangladesh and India.

Marrying sustainability with profitability is the need of the hour for companies in Asia.